Is this a good rate?Second opinion · Canada

Renewals and switching3 min readUpdated October 30, 2026

Switching lenders at renewal: is the lower rate worth it?

Option A

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Option B

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Mitey the yeti talks it through with an older yeti in glasses on a bench

At the end of a mortgage term you can move to a different lender without a prepayment penalty. A lower rate elsewhere is not automatically the better deal, though: switching can involve discharge, registration, appraisal and legal costs, and sometimes a new insurance premium. This guide puts staying and switching side by side and shows how to work out whether a rate difference pays for the move.

Mitey: “Count the costs first. Then the rate difference tells you something real.”

Staying versus switching at a glance

Both routes start from the same place: the term is ending, so no prepayment penalty applies to either. The differences are in the paperwork, the costs and who carries them.

What changes when you switch at maturity
Renew with your lenderSwitch to a new lender
Prepayment penaltyNone at maturityNone, if you move at the end of the term
PaperworkSign the renewal agreementNew application and documents; possibly an appraisal and legal work
CostsAny charges shown on the renewal statementDischarge, registration, transfer or assignment, appraisal and administration fees may apply
QualifyingAsk whether your lender reviews anythingAsk whether you'll need to requalify, including any stress test
Insurance premiumAsk if a change in amount or amortization affects itA new premium may apply if the amount increases or the amortization is extended
Collateral chargeStays as registeredCan cost more to switch
Time neededShortLonger, so start early

What switching can cost

FCAC lists the costs that can come with moving a mortgage to a new lender, and suggests asking the new lender whether it will cover some or all of them. Get any agreement to cover costs in writing, with a dollar limit if there is one.

  • Discharge fee charged by your current lender to release the mortgage.
  • Registration, transfer or assignment fees to put the new lender's charge on title.
  • Appraisal, if the new lender wants an up-to-date value.
  • Administration fees.
  • A new mortgage loan insurance premium, if the loan amount increases or the amortization is extended.

Working out the break-even

Take an illustrative $400,000 balance with 20 years of amortization left and a five-year term. Your lender offers 4.84%; another lender offers 4.59%. Switching costs $1,800, which you'd pay yourself.

Over the term, the lower rate saves $4,689 of interest, leaving $2,889 after costs, and the costs are earned back in about 24 months. The monthly payment falls from $2,594.06 to $2,540.69. If the new lender covers the costs, the whole interest saving is yours.

Worked exampleA quarter-point gap with costs paid by you
Balance
$400,000
Renewal offer
4.84%
Switch rate
4.59%
Switching costs
$1,800
Interest saved
$4,689
Net after costs
$2,889
Break-even (months)
24
Payment if you stay
$2,594.06
Payment if you switch
$2,540.69
Assumptions: $400,000 balance, 20-year remaining amortization, five-year term, $1,800 of switching costs paid by the borrower, semi-annual compounding. Computed by the site's calculators.

When the gap is narrow

Shrink the gap and the costs start to matter more. Same balance, same costs, but the competing offer is 4.74% instead. The interest saved over the term falls to $1,877, the net figure shrinks to $77, and the break-even moves out to about 58 months.

If you might sell, refinance or break the mortgage before the break-even point, the costs may never be earned back. Run both cases with your own figures in the renewal switch calculator, and see what a quarter point costs for a sense of scale.

Worked exampleA tenth-of-a-point gap, same costs
Balance
$400,000
Renewal offer
4.84%
Switch rate
4.74%
Switching costs
$1,800
Interest saved
$1,877
Net after costs
$77
Break-even (months)
58
Payment if you stay
$2,594.06
Payment if you switch
$2,572.65
Assumptions: $400,000 balance, 20-year remaining amortization, five-year term, $1,800 of switching costs paid by the borrower, semi-annual compounding. Computed by the site's calculators.

Put the offer in front of your current lender

Before you move, grade your lender's offer in the renewal checker. On our example, 4.84% gets a mark of 65 out of 100 ("grade C"), 0.50% above a best published rate of 4.34%. Each 0.25 points on this balance is worth about $4,700 over the 5-year term.

A competing written quote gives your current lender something specific to respond to, and staying avoids the switching costs entirely. The mortgage renewal script has wording for the call.

Worked exampleGrading the current lender's renewal offer
Rate
4.84%
Score
65
Verdict
grade C
grade
C
Benchmark
4.34%
typical
4.83%
Gap
0.50%
Direction
above
Cost vs benchmark
$9,367
Assumptions: A $400,000 uninsured balance, five-year fixed renewal, 20 years of amortization left, graded against the lowest published rate in Ontario when this page was built. Computed by the site's calculators.

Questions to ask a new lender

Write the answers next to each offer. Our renewal timeline shows when to ask so there's time to act on them.

  • Will you cover discharge, registration, appraisal or legal costs, and up to what amount?
  • Will I need to requalify, and which documents do you need from me?
  • How long will you hold this rate, and what happens if the switch takes longer?
  • Will the amount or amortization change, and would a new insurance premium apply?
  • What are the prepayment privileges, and how is the penalty calculated?
  • Will the mortgage be registered as a standard or collateral charge?

Questions people ask

Do I pay a penalty to switch lenders at renewal?

Not a prepayment penalty, because your term has ended. Costs such as discharge, registration, appraisal and administration fees can still apply, and the new lender may agree to cover some or all of them.

Can I borrow more when I switch?

You can ask, but it changes the transaction. A new mortgage loan insurance premium may apply if the loan amount increases or the amortization is extended, and the new lender will assess the larger amount. Get the full terms in writing before you decide.

What if my mortgage is a collateral charge?

A collateral-charge mortgage can cost more to switch. Ask your current lender how the mortgage is registered and ask the new lender what it would cost to move it, then include that in your break-even.

Is it worth switching for a small rate difference?

It depends on the costs you pay and how long you keep the mortgage. Work out the interest saved over the term, subtract the costs, and compare the break-even with how long you expect to stay. With the costs covered, even a small gap goes straight to you.

How long does switching take?

It varies with the lender, the appraisal and the legal work. Start well before your maturity date and ask the new lender how long its rate hold lasts and what happens if the switch isn't finished in time.

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